Despite some December jitters, the stock market has jumped more than 24% this year and Wall Street profits are likely to climb by almost 70%. The result will be big bonuses early next year, which will fuel consumer spending and income tax collections.
Merger and acquisition activity, Wall Street’s most lucrative business, is expected to accelerate next year as well, as the Trump administration relaxes the Biden administration’s tough antitrust stance.
And President-elect Donald Trump’s embrace of the crypto business will boost that sector too, as CEOs driven abroad by the Biden administration’s crackdown on the industry return to the United States — and primarily to New York, the nation’s financial capital.
Uncertainties abound following the Republican victory in the November elections, but the enthusiasm of Wall Street and other big companies for Trump’s deregulation and tax cut agenda is likely to provide a big boost to the city’s economy next year. Continued gains in tourism and new construction stemming from the Adams administration’s City of Yes housing rezoning also add to a bright outlook for 2025.
“There is a lot of positive news,” said Rahul Jain, the deputy state comptroller who specializes in New York City. “The strength of the economy both locally and nationally continues to be surprising to the upside.”
But other policies embraced by Trump and Republicans in Congress could upend the bullish forecast.
Tariffs on the scale he has promised could send consumer prices in New York higher and force the Federal Reserve Board to raise interest rates, hamstringing the economy.
Deporting hundreds of thousands of undocumented workers here could create a severe labor shortage here.
Slashing federal aid to the state and city could lead to a budget crisis and to sharp reductions in aid payments that many residents depend on.
Solid Job Growth
New York City finally regained all the jobs lost in the pandemic recession earlier this year, according to seasonally adjusted data from the state Labor Department. The city will end 2024 with a strong increase of about 80,000 jobs, reaching a record 4.8 million.
There is another side to that good news. Health and social services added 65,000 jobs through October, virtually the entire citywide gain of 70,000 and most of them in home health care. In 2023, those jobs accounted for all the employment increase, according to an analysis by City Comptroller Brad Lander.
The jobs pay an average of less than $36,000 a year (compared to the average city wage of $60,000), are primarily funded by Medicaid and are straining the state budget.
But economists at the city comptroller’s office believe that when the job numbers are revised in March, they will show more jobs in finance and other sectors. They also expect that Wall Street and the hard-hit information sector — film and tv production, internet streaming and media and related firms — will be doing more expansion next year.
In total, 2025 could see an increase of about 80,000, according to the city comptroller. A slightly less optimistic prediction from the Independent Budget Office still calls for an increase of 64,000.
Wall Street Leads
Wall Street profits could skyrocket to as much as $46 billion this year from an average of $24 billion in 2022 and 2023, according to the state comptroller. A 15% increase in bonuses would make the bonus pool almost $40 billion, a shot to the local economy.
Wall Street accounts for 19% of all state tax revenue and a little less than 10% of all city taxes.
While another strong year for stocks seems unlikely since the S&P 500 has risen 48% in the last two years, increased mergers and acquisitions should continue to produce strong profits.
Goldman Sachs CEO David Solomon said earlier this month that he expected an increase in such activity, and Morgan Stanley’s Tom Miles said he expected a return of big deals worth more than $40 billion, which would shower Wall Street with enormous fees.
Crypto Boost
The crypto industry will provide another shot to the financial industry.
With the Biden Administration determined to regulate the crypto industry, which includes both cryptocurrency activities and other forms of digital assets, many crypto founders took their companies abroad, says Ogle, a specialist in crypto safety who uses only one name and is advising the Trump family on their efforts to create their own crypto operation.
“You have companies that are coming back to the U.S. that left during the Biden Administration,” he said based on conversations he has had with many CEOs he knows. “They will come back to New York City.
Bloomberg recently counted 130 crypto companies in the city.
The biggest area of growth in crypto is what is known as decentralized finance — digital lending, borrowing and trading — and it’s centered in New York City. If the Trump administration allows major financial institutions to engage in crypto activities, where better to be than the nation’s financial capital.
Tourism and Construction
Beyond Wall Street, tourism has helped spur the economy. Hospitality has added 19,000 jobs this year, and hotel occupancy in October hit 91%, while average room rates soared well past $300 a night. Visitors to NYC will top 64 million this year, the city tourism agency said Friday, and the 2019 record of 68 million tourists should be broken next year.
The city’s construction sector continues to lag, down about 20,000 jobs from its pre-pandemic peak. But there is an expectation of improvement next year.
The city alone has won $2.3 billion in federal funds for infrastructure projects and other agencies have been promised billions more. At least some residential projects will be started under the new relaxed zoning rules from the City of Yes rezoning, which is predicted to add 80,000 housing units over the next 15 years.
Whether the economic gains will help groups that have not benefitted from the job gains is very unclear.
“The slow growth of the past couple of years has benefitted people already privileged in the job market — white people and people with bachelor’s degrees,” said Lauren Melodia, an economist at the Center for New York City Affairs at the New School. “Who hasn’t benefitted has been people of color, especially men of color and young people.”
But the Adams Administration remains bullish. New research from the Economic Development Corp. says that 500,000 people with bachelors degrees have moved to the city since 2021, a talent pool that will keep finance, tech and professional service firms expanding here.
And they see the Trump policies glass as half full.
“The president-elect is well aware of the strengths of the city and the importance of the city to the national economy,” said EDC President Andrew Kimball.
